Latvia's finance ministry dramatically revised downwards its macroeconomic forecast for the Baltic state during 2009 on Wednesday, dpa reported.
A finance ministry prognosis, produced in collaboration with the Latvian central bank and the economy ministry, predicted GDP will decrease by 12 per cent this year, replacing its earlier prediction of a 5 per cent contraction in the economy.
Explaining the reasons for the revision, Finance Minister Atis Slakteris said: "It was affected by the deterioration in the external environment and a decrease in exports. Consumption is becoming weaker and negative growth is expected in all major trading partners of Latvia in the European Union and the East."
Average annual inflation will fall to 3.3 per cent from 15.4 per cent, Latvia's current account deficit will be equivalent to 7.3 per cent of GDP and unemployment will account for reach 12.7 per cent of the workforce, the finance ministry predicted.
The revised figures will be incorporated into a supplementary budget due to be put to the Latvian parliament on March 31.
After years of rapid economic growth, the Baltic state's economy collapsed in late 2008, forcing the government of Ivars Godmanis to ask for a 7.5-billion-euro (9.5-billion-dollar) loan from the International Monetary Fund, the European Union, and other bilateral and multilateral donors.
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